Monopolies march on

Pity the antitrust regulator. As the Obama administration
pacifies its way toward the 2012 elections, those bureaucrats charged with
protecting small businessmen from monopolies are dropping like flies.

Take J. Dudley Butler, the head of the soporific-sounding
Grain Inspection, Packers and Stockyards Administration. Butler, a lawyer who
built a career fighting powerful, giant poultry companies who unjustly squeezed
money from the farmers they contracted with, jogged into his position fists up,
vowing
to enforce the Packers and Stockyards Act. The underenforced law is a potentially potent piece of
1921 legislation passed on the heels of the Sherman and Clayton Acts and aimed
at protecting smaller cattle producers, feedlot owners, and poultry growers
from the market manipulations that occur when just a few buyers control the
marketplace. (This is called a monopsony;
a situation when many sellers only have one buyer and thus can be forced to
take the one buyer's offered price, as opposed to a monopoly, when there is
only one seller and the buyers are forced to take the seller's price. As reported in Harpers magazine, Walmart has power similar
to a monopsony, too.)

Butler's departure was punctuated by that of Sharis Pozen,
who was heading up the Department of Justice's antitrust division. Pozen was
acting chief for just
six months, filling the role vacated by former antitrust head Christine
Varney, who, like Pozen, left to return to private practice. Although the New York Times' Dealbook blog post on Pozen's
resignation cites legal insiders saying DOJ's antitrust
activities are still going strong, the "reinvigorated enforcement of
antitrust laws" referenced in that coverage seems to be a fickle pursuit,
limited to telephone companies and internet titans rather than beef monopolies
and giant seed corporations.

After the loss of Varney last summer, a wave of dismay passed
through those concerned about monopoly and monopsony power in agriculture. In
2010, the Department of Justice and the Department of Agriculture had held a
series of five hearings on the topic of agriculture and competition (or lack
thereof), each addressing a different sector: dairy, poultry, beef, seeds and
retail. Varney, whom a source once told me reminded him of "Teddy
Roosevelt in heels and a skirt," had been a prominent presence at the
meetings, standing up for beleaguered chicken farmers and listening to
dairymen's tales of woe.

But now Varney's gone, and the push to undo over 30 years of
agricultural consolidation may have disappeared with her. A 2007 report (PDF) by Bill Heffernan, a rural
sociologist and professor emeritus at the University of Missouri, who has been tracking consolidation in agriculture for many years,
lists the following levels of concentration in U.S. agriculture industry:

Obviously, the degree to which consolidation of market power
lessens competition and stifles innovation differs considerably from industry
to industry. But when farmers see seed prices rise 30 percent in a year, as
they did in 2010, and have no one else to buy from, or when just a few
companies control more than a third of the market, the ability of a small group
of corporations to set the terms of the marketplace is strong, and the ability
of small producers and individuals to fight it is weak. Capitalism is built
upon a system of many buyers and sellers coming to agreement in an open
marketplace. When the numbers on either side become skewed, the potential for
market failure becomes high.

To be fair, Obama's Department of Justice has made far more
of its antitrust authority than any of the four administrations before it. But
it's also had its fair share of setbacks; to date, almost nothing has come of
the competition workshops where farmers poured out their hearts and souls to
the few people with power to change the system. And it's unclear which direction
DOJ is heading in terms of enforcing antitrust violations against the powerful
companies whose grip on agriculture remains strong. In 2010, the department had
been reported to be examining
antitrust issues in the seed industry; that investigation has disappeared
from the news, although in early 2011 a few observers registered their fear
that their investigation would fail to result in any change. In the
meantime, the agribusiness industry's march toward greater consolidation
continues.